Educational Articles

June 30, 2014 Mid-Year Mutual Fund Review

Peter Healy
| July 28, 2014

The stock market continued its forward move during the second quarter of 2014. The Dow gained a modest 2.2% during the second quarter, while achieving a 7.9% return year to date. The market also showed broader strength for the first six months of 2014, with the Russell 3000 Index reporting a gain of 9.9%.

What follows below is a synopsis of the best performers over various time periods as of this date from the Value Line database. Leveraged funds have been excluded due to their structure as have share classes with minimum initial investments of $100,000 or greater.

YEAR TO DATE

For the first six months of the year, the best performer was the Tocqueville Gold fund (TGLDX) with a return of 36.7%. The fund invests at least 80% of its assets in either gold or companies engaged in mining or processing gold. The fund’s top holdings are currently physical gold, followed by Osisko Mining Corp., Royal Gold Inc., and Goldcorp.

Second best was another gold fund, Van Eck Intl. Investors Gold (INIYX) at a gain of 36.2%. The fund invests at least 80% of its assets in companies engaged in gold-related activities. The top three holdings are Rangold Resources Limited, Yamana Gold Inc., and Tahoe Resources Inc.

Next on the performance list was Matthews India fund (MINDX), returning 35.9%. The fund invests at least 80% of its assets in companies located in India. Top three holdings for the fund are Kotak Mahindra Bank, Ltd., ITC Ltd. and Gujarat Pipavav Port, Ltd.

ONE YEAR

The best one year performer was the T Rowe Price Global Technology fund (PRGTX) with a return of 51.7%. The fund will normally invest at least 80% of its assets in companies that generate revenues through the development, advancement and use of technology. The top three holdings are ASML Holding, Amazon.com Inc., and Google Inc.

The second best for one year was the Firsthand Technology Opportunities fund (TEFQX), 50.9%. The fund invests at least 80% of its assets in technology companies, specifically those that engage in a high degree of engineering and/or scientific intensity to deliver their products or services. The top three holdings are Apple Inc., GT Advanced Technologies Inc., and Amazon.com Inc.

Third best was Cambiar Aggressive Value Fund (CAMAX) with a return of 50.8%. The fund seeks long-term capital appreciation through investments primarily in global equity securities. Top three holdings are MGM Resorts, Ford Motor Co., and Anadarko Petroleum.

THREE YEARS

Over the three year period ending June 30, 2014, the best performing fund was Fidelity Select Biotechnology (FBIOX) with an annualized return of 35.5%*. The fund invests at least 80% of its assets in securities of companies principally engaged in research and development and business activities in the biotechnology sector. Current top holdings are Gilead Sciences Inc. Biogen Idec Inc. and Amgen Inc.

Second best was the Franklin Biotechnology Discovery fund (FBDIX) posting a return of 32.0%. This fund also invests at least 80% of its assets in securities of companies principally engaged in research and development and business activities in the biotechnology sector. Top three holdings are Gilead Sciences Inc., Biogen Idec Inc., and Celgene Corp.

Completing the biotechnology trifecta was Rydex Biotechnology fund (RYOIX), which returned 31.6%. The fund follows basically the same investment style as the two entrants above. Its top holdings are currently Gilead Sciences Inc., Amgen Inc., and Celgene Corp.

FIVE YEARS

The top performing fund over the last five years was PIMCO Real Estate Real Return Strategy fund (PETDX), coming in at 31.5%. Under normal circumstances, the fund invests in real estate linked derivative instruments backed by a portfolio of inflation-indexed securities and other fixed income instruments. There are thus no top equity holdings to report here.

The next best fund was the AMG SouthernSun Small Cap fund (SSSFX), returning 30.5%. The fund invests in small cap securities while taking a value style approach. There are typically 20 – 40 companies within the fund’s portfolio. Top three holdings are Carbo Ceramics Inc., Darling International Inc., and Iconix Brand Group.

The third best performer was the Fidelity Select Air Transportation fund (FSAIX), with 29.8% return. The fund’s strategy is to invest at least 80% of assets in companies engaged in movement of passengers, mail, and freight via aircraft. Top holdings are Boeing Co., United Parcel Service Inc., and Delta Air Inc.

TEN YEARS

Over the last decade, the top performer was Prudential Jennison Health Science fund (PHSZX), returning 16.7%. The fund invests at least 80% of its assets in securities of companies in the health science sector such as pharmaceutical, biotechnology, medical device as well as healthcare service. Top three holdings are Alexion Pharmaceutical Inc., Biomarin Pharmaceuticals Inc. and Vertex Pharmaceuticals Inc.

Next on the list is Blackrock Latin America (MDLTX), logging a 15.9% return. Under normal conditions, the fund will seek to invest at least 80% of its assets in Latin American securities of any market cap. The fund will seek not to invest in a large number of countries. Top holdings are ITAU Unibanco Holding SA, Petroleo Brasileiro SA, and Banco Bradesco SA.

Third best was Oppenheimer Developing Markets fund (ODMAX) at 15.8%. The fund targets securities of companies in developing and emerging markets throughout the world, while investing in at least three developing markets. The top three holdings are Baidu.com, Yandex NV, and Novatek OAO.

In summary, as noted above, the winning funds over a specified time period will generally come from the same sector as exemplified with the success of gold funds year to date and technology over the trailing twelve months. Thus, doing one’s “homework,” and finding a sector with good prospects and then allocating a portion of one’s portfolio towards that can provide significant results to one’s returns.

*All returns reported hereafter are “annualized.”

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.